Key takeaways from MWC
Bank of America Merrill Lynch (BAML)’s tech team attended MWC this week and met with vendors and carriers. The show was crowded with tremendous focus on the applicability of mobility. Outside of the usual handset and semiconductor presenters, the analysts met with companies that apply mobility (automotive, for example) and drive up network traffic, with three takeaways. First, “Samsung could be the new Apple Inc. (NASDAQ:AAPL)”, according to BAML. Second, vendors are bullish on 2013 carrier spending and lastly, the true potential of mobility is showing its power, with endless numbers of applications that apply to all walks of life, driving up demand for devices, hence semiconductors. Most companies sounded optimistic, but comments from management teams of F5, Allot, Intel Corporation (NASDAQ:INTC), Broadcom, Skyworks, and ARM Holdings were stronger than they had expected.
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Plethora of product announcements – mostly me too
The Chinese vendors had great presence, with Huawei and ZTE capturing some of the best spots in the conference hall showing solid products. LG also presented new smartphones and laptops. However, the main conclusion points to the absolute commoditization of the smartphone market. The products mostly offer the same user experience and only differ by the color and logo. The more interesting conclusion is the replacement of Apple Inc. (NASDAQ:AAPL) by Samsung Electronics Co., Ltd. (KRX:005930), when it comes to the source for copy-cutting.
Most devices aim to copy Samsung’s design and feature, and Apple Inc. (NASDAQ:AAPL) was not only physically absent from the show, it was also absent from participants’ mind. BAML believes that “all phones are working under their rigorous on-the-spot testing of swiping their fingers from left to right. They also all carry strong technology under the hood. However, the design and general “oomph factor” is challenged and generally lags behind the leading brand. On the positive side, Samsung booth was impressive (and packed) with a new announced tablet and innovative laptops.”
Wake up Apple Inc. (NASDAQ:AAPL) says BAML
Lastly on the high level takeaways, Apple Inc. (NASDAQ:AAPL)’s declining stature in the field of innovation was very apparent this show. BAML believes its products are not compelling as compared to Samsung Electronics Co., Ltd. (KRX:005930). The Note 8, Samsung’s response to the iPad mini out-innovates Apple by a wide margin, with excellent display, strong performance, stylus pen, editing software and other innovations. The crowd is also waiting for Samsung’s forthcoming Galaxy S4 and the innovations it might bring. The analysts believe Apple Inc. (NASDAQ:AAPL)’s recent products, the iPhone 5 and the iPad Mini simply can’t stand next to the innovation and buzz Samsung has brought to the market. BAML Hardware Analyst Scott Craig notes these issues, yet suggests this is already embedded in Street expectations, while the “innovation option value” is not factored in. Apple Inc. (NASDAQ:AAPL)’s proven historical execution on product leadership and out-of-the-box thinking is not captured in the current price and any new solutions/platforms could therefore change the current consensus thinking.